Ans 1 b

Challenges to retail Industry:

The biggest challenge facing the Indian organized retail sector is the lack of retail space. With real estate
prices escalating due to increase in demand from the Indian organized retail sector, it is posing a
challenge to its growth. With Indian retailers having to shell out more for retail space it is effecting there
overall profitability in retail. 

Trained manpower shortage is a challenge facing the organized retail sector in India. The Indian retailers
have difficultly in finding trained person and also have to pay more in order to retain them. This again
brings down the Indian retailers profit levels. 

The Indian government have allowed 51% foreign direct investment (FDI) in the India retail sector to
one brand shops only. This have made the entry of global retail giants to organized retail sector in India
difficult. This is a challenge being faced by the Indian organized retail sector. But the global retail giants
like Tesco, Wal-Mart, and Metro AG are entering the organized retail sector in India indirectly through
franchisee agreement and cash and carry wholesale trading. Many Indian companies are also entering
the Indian organized retail sector like Reliance Industries Limited, Pantaloons, and Bharti Telecoms.
But they are facing stiff competition from these global retail giants. As a result discounting is becoming
an accepted practice. This too bring down the profit of the Indian retailers. All these are posing as
challenges facing the Indian organized retail sector. 

PROBLEMS: 

1. The organized retail industry in India is faced with stiff competition from the

unorganized sector.

2. There is a shortage of quality real estate and

infrastructure requirements in our country.

3. Opposition to Foreign Direct Investment from small traders affects retail

industry.

4. Very high stamp duties on transfer of property affects the industry.

5. Shortage of retail space in central and downtown locations also hinders the
growth of retail industry.

6. Presence of strong Pro-tenancy laws makes it difficult to evict tenants and

this is posing problems.

7. Land-use conversion is time consuming and becoming complex.

8. For settling property disputes, it consumes lot of time.

9. Rigid building laws makes procurement of retail space difficult.

10. Non residents are not allowed to own property except they are of Indian
origin.

11. Prohibition of Foreign investment in real estate business.

12. Customs duties are levied on import of goods in India.